Discount retailer B&M European Value Retail has reported a 25.9% increase in full-year revenues, to £4.8 billion (€5.59 billion), with like-for-like growth across its UK store estate rising 23.8%.
“The last year has been an exceptional one," commented chief executive Simon Arora. "Our results reflect the speed at which we responded to the challenges presented by COVID-19, and the strength of our execution."
Here's how leading retail analysts viewed its performance:
Russ Mould, AJ Bell
“Value chain B&M was one of those rare retail names which did well during the pandemic and as a result its sales trajectory is a mirror image of most other retailers which are seeing sharp increases in revenue as restrictions are eased. Having received the prized ‘essential retailer’ status thanks to its groceries offering, the company was able to trade at a time when most rivals, other than the supermarkets, were shuttered.
“This inevitably allowed the B&M to snaffle market share and set a very hard act to follow for 2021. There was also a stockpiling effect in the early stages of COVID-19 which further inflated sales.
“While some level of drop off is only to be expected, shareholders will be crossing their fingers that the business can hold on to at least a decent chunk of the new customers it won in 2020. This means it needs to get the basics of retail absolutely spot on, ensuring stores remain attractive, clean and safe destinations with the products they want at attractive price points.
“The company is continuing with an ambitious rollout of new stores and it sounds like it will remain on the lookout for any opportunities that arise as peers who were harder hit in the last 12 months exit the market.”
Adam Tomlinson, Liberum
"B&M’s FY21 results (EBITDA £626m; +83% y/y) yet again shows the strength of its discount, general merchandise offer and predominantly retail park sites, which have left it primed to benefit during the lockdowns, as well as being a long-term structural winner. Its value offer continues to drive new customer acquisition, while maintaining margin strength, broad category growth and very strong FCF.
"Current trading with B&M UK LFLs -1% is a robust result vs. the +26.9% Q1 comp. There is the question of where trading settles, but as consensus is baking in c.-7% LFLs for the full year FY22 we don’t see cause for concern at this stage and we expect consensus forecasts to remain unchanged. We reiterate our BUY and do not see the current valuation (CY21 PER c.16.5x) as stretching."
Amy Higginbotham, GlobalData
“B&M cemented its position as a clear winner amid the pandemic, reporting exceptionally strong sales growth for FY2020/21 to the end of March, and on double-digit comparatives. B&M’s core UK business outperformed, benefiting from its essential retailer status which allowed it to keep stores open during all three national lockdowns. Sales growth at its French business, Babou, was not as strong (+9.1%), though still commendable given that some stores were closed for up to 10 weeks of the period.
"The value retailer’s wide product range served it well, allowing it to capitalise on high demand for categories such as homewares, DIY and gardening. The shift towards these higher-margin categories helped B&M grow its profitability; group profit before tax more than doubled, up £273.4m to £525.4m, while adjusted EBITDA rose £284.1m to £626.4m.
"It will be challenging for B&M to maintain growth in FY2021/22 given the strong comparatives and the reopening of non-essential retailers such as home specialists, which has once again widened consumer choice; B&M’s UK like-for-like sales declined 1% in the first nine weeks of its new financial year. However, B&M’s value proposition will continue to appeal among those looking to trade down for on-trend products.”
James Anstead, Barclays
"Once again, it is difficult to avoid using the expression 'hard to fault' with regard to B&M's results. Perhaps the only problem with the FY21 results is that the year ended so strongly that it may have pulled forward some sales and profit at the expense of FY22 – but we believe that matters only from a timing perspective. While FY21 was an impressive year, the – mostly understandable – reluctance to offer more precise guidance on FY22 is unhelpful for sentiment, and it feels as if the stock could potentially drift over the summer.
"While we still think B&M is a very interesting medium-term growth story, we also think the valuation is largely 'up with events' and reiterate our Equal Weight rating and 550p price target."
© 2021 European Supermarket Magazine. Article by Stephen Wynne-Jones. For more Retail news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.
